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Zones

Time to reject: Clegg v Andersson

25.07.2003
United Kingdom

Bernstein v Pamson
Motorsestablished
that three weeks was too long to keep a car before rejecting it. A
recent case has, however, overruled this. In Clegg v
Andersson (2003), the Court of Appeal said that the Claimants
were entitled to reject a brand new boat even after seven
months.

Mr and Mrs
Clegg bought a new yacht from the Defendant in August 2000. The
yacht had a number of extras, including a shoal draught keel. When
the manufacturer delivered the yacht to the Defendant in July 2000,
the Defendant noticed that the keel was substantially heavier than
the manufacturer’s standard specification. The Defendant
informed the Claimants of this fact when he delivered the yacht to
them. The Claimants sailed it for a day, and then for an eight-day
trip, following which Mr Clegg told the Defendant that he liked the
boat and the way it sailed. The Claimants and the Defendant
corresponded regularly regarding the overweight keel until March
2001. The Defendant liaised with the manufacturer of the yacht and
recommended to the Claimants that 1000kg of excess lead be shaved
off the keel. The manufacturer sent staff to do the work, however,
the Claimants suggested that, rather than remove weight, the
rigging could be adjusted to compensate for the excess weight. The
Claimants instructed the Defendant not to allow any work to be
carried out until it had provided them with plans and amended
specifications, as well as information regarding the yacht’s
performance and the effect of the overweight keel and various
proposed modifications on resale. The Claimants made clear that
they did not have the relevant expertise to decide on what
modifications were appropriate, and needed certain information so
that their advisors could assist them. The information requested
was not provided to the Claimants until 14 February
2001.

Three weeks
later on 6 March 2001 the Claimants rejected the yacht on the basis
that it had not yet been perfected and delivered and the sea trials
had revealed problems. The Claimants claimed the return of the
purchase price and damages for breach of contract.

At trial the
Claimants claimed that s13 Sale of Goods Act 1979
(“SGA”) had been breached because the yacht supplied
did not correspond with the description in the contract, which
entitled them to reject the yacht and to recover the purchase price
and damages. However, the judge decided that the Claimants were not
entitled to reject the yacht because the contractual term regarding
the keel’s weight was not a condition, and the yacht as
delivered met the description in the contract of the goods to be
sold. In any case, even if there had been a breach of condition,
the Claimants had lost their right to reject the yacht before 6
March. There was no breach of s14 SGA, as the yacht was of
satisfactory quality - the implications of the keel being
overweight were so small as to be incapable of measurement in
relation to matters such as speed and fuel efficiency, and so long
term and so dependent on how often the yacht was sailed and in what
conditions of wind and sea in relation to the possibility of a
reduction in the service life of the rigging. The Claimants had
also failed to mitigate their loss. The Claimants
appealed.

The Court of
Appeal considered three issues:

whether there was a breach of
condition;

if so, whether the Claimants had lost their right to reject
the yacht; and

whether the Claimants were in any event entitled to damages
and if so, how much.

Was there a
breach of condition?

On appeal, it
was decided that the evidence established beyond doubt that the
effect of the overweight keel on the safety of the rig was both
adverse and unacceptable to the manufacturers of the rig, and the
yacht required remedial treatment. At first, the Defendant had
proposed to have 1000 kg shaved off the keel, however this was
later reduced to 800 kg. The Court held that a reasonable person
would consider that the yacht as delivered was not of satisfactory
quality because of the overweight keel, the adverse effect this had
on rig safety and the need for more than minimal remedial work. The
Court said that a “reasonable person” was not an
expert. In this case, had the reasonable person been told that the
seller himself had realised that a very large quantity of lead
would have to be removed in some as yet unspecified way from the
keel of a brand new, valuable boat, with as yet unspecified
consequences for its safety and performance, he would have little
difficulty in concluding that the boat was not of satisfactory
quality. Had he been told that the seller would later recommend
removal of different quantities of lead, he would have no
difficulty in concluding that the yacht was not of satisfactory
quality. Further, the parties’ experts agreed that the yacht
was dangerous as a result of the excess weight of the keel. On this
basis, the Claimants had established a claim under s14 SGA and it
was unnecessary to consider whether a claim existed under s13 as
well.

Had the
claimants lost their right to reject the yacht?

A buyer has the
right to reject goods that are not of satisfactory quality,
although he does have to act reasonably in choosing rejection
rather than damages or cure. He can reject the goods for whatever
reason he chooses, as long as he has not lost the right to do so by
accepting them (s11(4) SGA).

In this case,
the Claimants were initially entitled to reject the yacht. However,
the Defendant argued that they had lost this right by the time they
purported to reject the yacht on 6 March 2001. At the original
trial the judge agreed that the Claimants had accepted the yacht
through their conduct following the delivery of the yacht. These
actions included taking an eight day family cruise, instructing the
Defendant that remedial work should not be undertaken on the keel,
leaving personal possessions on the yacht throughout the process,
Mr Clegg’s indication that he wished to move the yacht to
Portugal or Gibraltar in May 2001, his assertion that he had an
insurable interest in the yacht and his attempt to register the
yacht. The Judge said that the concerns Mr Clegg raised in
correspondence did not relate to whether he should reject the
yacht, but simply whether the remedial work proposed by the
Defendant was necessary.

However, on
appeal the Court held that these actions did not indicate
acceptance of the yacht. In his correspondence with the Defendant,
Mr Clegg had simply been requesting information so that he might
decide whether or not to accept the yacht. He had requested revised
specifications and measurements so that his advisors might help him
to determine whether or not to accept the yacht. Until these were
delivered, the Claimants were in no position to decide whether to
accept the yacht or not. Even if they had agreed to the remedial
repairs, this would not mean they had accepted the yacht, since
under s35(6)(a) SGA a buyer is not deemed to have accepted goods if
he asks for or agrees to their repair by the seller. The acts of
insuring the yacht and attempting to register it were not
inconsistent with the Defendant’s interest in it, especially
since the Claimants were obliged to do so under the loan agreement
for the purchase money. Mr Clegg had not known that the yacht was
dangerous when he took his family on holiday on it.

A buyer is
deemed to have accepted goods when after the lapse of a reasonable
time he retains the goods without intimating to the seller that he
has rejected them (s35(4) SGA) and a “reasonable time”
is determined by the facts of each case. Time taken in requesting
or agreeing to repairs, and for carrying out the repairs, is not to
be counted. In this case, the Claimants had not received the
information they had requested until three weeks before they
rejected the yacht, which did not exceed a reasonable time. The
Claimants were therefore entitled to reject the yacht on 6 March
2001, and to the return of the purchase price and other acquisition
costs, as well as compensation for consequential losses.

Conclusion

The principles
arising from this case do not simply apply to the purchase of
boats, but to any goods. The Court of Appeal held that the
principle arising from Bernstein v Pamson Motors is no
longer good law, since it was based on the provisions of the Sale
of Goods Act 1979, before amendment by the Sale and Supply of Goods
Act 1994. Whether a buyer has lost the right to reject goods by
leaving it too long to tell the seller he is rejecting them will
come down to the facts of each case, however as a result of
Clegg v Andersson, the consumer appears to be placed in a
much stronger position than he was by Bernstein v Pamson
Motors.

For further
information please contact Diane Everist at
diane.everist@cms-cmck.com or on +44 (0)20 7367
2050

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